The Planet of Cities: the journey of European cities from 1980 to 2080

Greg Clark, Urbanist
Borane Gille, Head of Cities Innovation, The Business of Cities

In the last 50 years, European cities have struggled to keep pace with the world’s fastest-growing urban centres, in terms of size, demographics, productivity, economic dynamism, connectivity and innovation. Cities in Asia and the Middle East are growing at an unprecedented scale and cities in North America push the boundaries of technology and innovation. Conversely, European cities are often seen as at risk of being irrelevant in the global future.

But this view is changing. Europe’s cities are gearing up for a future rooted in their unmatched liveability, sustainability and resilience advantages. Europe’s cities are orienting towards the urban innovations that draw on their globally high levels of social, spatial and civic capital.  

European cities in the 1980s and 90s

In the 1980s, European cities lacked popularity. Many Western European cities were experiencing deindustrialisation, suburbanisation and population decline. Job losses and unemployment rates had reached high levels, especially in single industry cities, their industrial districts and poorest neighbourhoods. In the 1980s and 1990s, European cities lost on average between 30% and 80% of their manufacturing jobs.

While some European countries modernised their manufacturing base, others then shifted their economy towards the services, knowledge and creative sectors. This had the unintended consequence of intensifying inter-regional and inter-city disparities. As the service sector gained traction, cities such as London, Paris,  Milan, Frankfurt, Amsterdam and Brussels, emerged as the leading destinations of multinational corporations and new hubs for the financial and professional services sectors. By the 1990s, the service sector had become by far the most important source of employment in these larger modernising European cities.

This movement towards knowledge and service-based economies required a parallel shift in urban form, with an emphasis on urban lifestyles, city amenities and modern offices that could support agglomeration and clustering of the new economy jobs and their workers. The 1980s and later the 1990s therefore saw a shift in urban policies to focus more on large-scale inner-city regeneration. New public agencies were created to deliver change and catalyse private sector funding. This was essential, not only in revitalising city centres, but also in attracting new businesses, rebuilding a sense of place and re-establishing European cities as attractive destinations in the global marketplace. Examples include Schiphol in Amsterdam, La Défense in Paris, Canary Wharf in London, Poble Nou in Barcelona and Ørestad in Copenhagen.

The collapse of the Soviet system at the end of the 1980s also accelerated deindustrialisation in Central and Eastern European cities. This led to a long additional period of economic decline and readjustment in those regions and increased population flows east to west.

European cities today

The European urban landscape has now evolved into one of the most integrated, interdependent and polycentric continental systems of cities globally. Europe is perhaps the first region with a continent-wide system of cities, and a supranational level of government. EU integration has facilitated trade expansion, talent flows, inter-city and regional connectivity, economic specialisation and cross-border exchange and collaboration. Urbanisation continued throughout the 1990s and 2000s, with populations moving from rural areas to towns and cities, core cities to suburbs, and into multiple and multi-nodal networks of connected cities and fast-growing towns.

According to the European Commission, nearly four in five Europeans now live in cities and large towns, but the type of cities they live in varies significantly. The European urban landscape is highly heterogenous, made up of more than 800 small, medium and large cities with different roles and at different points in their life cycles:

• International hubs, with 17 of the 50 cities with the most globally networked companies being in Europe. These include London, Paris, and also Amsterdam, Stockholm, Madrid, Milan and Berlin (Figure 1).
• Specialised cities, that have important functions in trade or services, are centres for innovation, knowledge and education hubs, or major tourist destinations. These include Munich, Barcelona, Eindhoven, Krakow, Lisbon, Vienna and Prague.
• Regional hubs, that serve wider dispersed markets, or are cities in transition to new regional roles. Among these Lyon, Sevilla, Gothenburg, Hamburg, Antwerp and Poznan are visible.

Eastern and Central European cities have emerged from the collapse of the Soviet Union and invested to adapt, adjust and transition to the demand in the new market economy.

European cities serve global demand for education, tourism, healthcare, diplomacy, business processing and expertise. They also stand out for their efforts to overcome spatial fragmentation and establish coherent city and metropolitan management structures. Nearly 70% of Europe’s largest cities have some form of metropolitan platform, with or without authority.

Today, new global realities are putting pressure on European cities and revealing some disadvantages and challenges. European cities are relatively small compared to cities in the United States and Asia and opportunities for urban densification are limited by already compact forms and heritage policies.  Moreover, their population is ageing, with 60% of European cities having more than 20% of their population above 65 years. The demographic outlook is also less promising with 52 of the 100 slowest growing urban areas in the next 15 years being in Europe. 

In this current cycle, some of the priorities include:

• Delivering on ambitious climate goals, to become the world leaders: More than 100 cities and towns have pledged to become climate neutral by 2030, with the aim to collaborate and share knowledge for others to follow suit by 2050. Cities across the continent are investing in and trialling new solutions to green their urban infrastructure, from building retrofit and low-carbon transport to district heating and new waste management practices.
• Supplying affordable housing: On average, an apartment in European cities costs 10 times the median of disposable annual income. House prices have increased by 46% and rents by 21% in the EU between 2010 and 2023 and tens of millions of Europeans are overburdened by housing costs. Affordable housing has now become a top three priority among European mayors. It is important to tackle as it poses a risk to social cohesion in European cities as citizens compete for limited space and lower income households are forced outside the city.
• Boosting innovation and venturing: European cities are seeing some success in the global tech race but are still behind North America and China when it comes to venture capital investment, startup creation and research commercialisation. European cities already have many advantages to build on, including the strength of their research institutions, the proximity between major European innovation hubs and a history of civic and social innovation.
• Tackling side effects of success, such as over-tourism, effectively. Just in the first half of 2024, 1.2 billion nights were spent in tourism accommodation across the European Union. From Dubrovnik to Venice, to Amsterdam, European tourist destinations are struggling to cope with tourism flows and have been introducing measures to curb tourist numbers. These include visitor taxes and restrictions in the amount and availability of accommodation. Given the additional pressure on local amenities and public transport, this is fuelling an anti-tourism sentiment among residents in the most visited cities.

European cities towards 2080

Looking towards the second half of this century of cities, European cities have a compelling set of advantages that are hard to replicate in other parts of the world. Their physical connectivity, quality of life and track record for collective action are the fruit of decades of collaboration and co-ordination among a system of cities that other regions have yet to build. European cities also benefit from their relatively smaller size, that makes them quicker to adapt and take action. For them to address the challenges of economic transition, climate change, geo-political disruption, populism and global insecurity, they will need stable and capable political systems to empower them with the tools and financing they need.

Building on their advantages, expertise and experience in sharing knowledge and learning from others, European cities can be:

• Greener, healthier and more resilient: European cities have already prioritised commitment to climate action, fast-tracking renewable energy and energy efficiency, setting bold city-wide reduction targets and pushing firmer legislation and regulation. Two-thirds of EU cities already have a climate mitigation or adaptation plan in place. As they adapt for climate change and progress on the healthy city agenda, we can expect them to retain and strengthen their sustainability advantages.
• Better connected and networked: More than 430 cities will be connected through the Trans-European Transport Network (TEN-T), enabling more fluid and efficient transport for freight and passengers.
• More integrated, with high trust and social capital: European cities can build on their already existing capable and transparent city leadership to address some of their challenges. In the future, more innovative mechanisms and tools will be created to facilitate public-private partnerships, increase community participation in decision making and improve systems to re-invest in cities. Here, European cities’ smaller size and slower pace of change (Figure 2) can be an advantage, to ensure no one is left behind and build long-lasting trust with citizens. 
• Better governed: More powers will be devolved to local governments and greater co-ordination at city, metropolitan and regional scale can be expected. One unique feature in the European city landscape is the role that European institutions play at the supranational level. City leaders are a direct channel between EU institutions and citizens. Through increased direct dialogue with city leaders, EU institutions can ensure that their policies and interventions have the most meaningful impact on citizens.

As attention turns to the next half century and the possible impacts of new industries, climate calamities, social and political divergence, and Asia’s ascent, Europe’s cities and their advocates need to be focused and intentional. Their governance and investment platforms, the strength of their institutions and their soft power and reputation are formidable foundations to shape and lead the way into an uncertain future. By focusing on the strengths of European cities, they can emerge even stronger.